July 27 (Bloomberg) -- Australand Property Group prefers to
issue bonds in the U.S., where terms are longer and borrowing is
cheaper, than in Asia, where its parent company CapitaLand Ltd.,
is based.

“Because of our relationship with CapitaLand, Asia is a
logical market for us to access financing,” Chief Financial
Officer Kieran Pryke said in an interview in Sydney yesterday.
“But the pricing and terms weren’t as attractive, so we’ve
ended up going to the U.S. instead. We’ll continue to look at
that market and nurture our relationships with the investors who
participated there.”

Australand, which last year completed documentation
allowing it to access Asian debt markets, has so far not sold
any bonds in the region, choosing instead to issue A$170 million
of guaranteed senior notes in the U.S. private placement market
in April. The group doesn’t have a domestic debt rating, which
prevents it from selling bonds in Australia.

The Sydney-based company will seek “attractively priced”
domestic bank debt that will mature between 2015 and 2020, when
it has no other loan expiries, Pryke said. Singapore-based
CapitaLand, Southeast Asia’s biggest developer, owns almost 60
percent of Australand.

Australian property groups including Westfield Group, CFS
Retail Property Trust and Goodman Group have sold more bonds
domestically and overseas so far this year since 2003 as their
property values have stabilized and they’ve reduced debt
following the global financial crisis.

Housing

Australand this week cut its forecast for residential lot
sales growth to 20 percent from the 25 percent expected three
months ago. The group said net profit rose 17 percent to A$84.8
million from a year ago, boosted by growth in its development
division.

“What we’ve seen, particularly in April, May and June, is
a very distracted consumer,” said Rod Fehring, executive
general manager of Australand’s residential division. “They’re
very interested, very responsive to marketing, but are unwilling
to commit.”

Australian home prices fell 1.2 percent in the three months
to May, real estate researcher RP Data said last month. Consumer
confidence plunged by the most since October 2008.

Building approvals dropped in May by the most in four
months, which will continue to exacerbate a shortage of housing
and keep prices flat, supporting Australand’s growth forecast,
Fehring said.